Suppose Brady House restaurant is considering whether to (1) bake bread for its restaurant in-house or (2) buy the bread from a local bakery. The chef estimates that variable costs of making each loaf include $0.54 of ingredients, $0.25 of wariable overhead (electricity to run the oven), and $0.72 of direct labor for kneading and forming the loaves. Allocating fixed overhead (depreciation on the kitchen equipment and building) based on direct labor, Brady House assigns $1.05 of Fixed overhead per loaf. None of the fixed costs are avoidable. The local bakery would charge $1.70 per loaf. Read the requirements. Requirements 1. What is the unit cost of making the bread in-house? Complete the following outsourcing decision analysis to determine Brady House's unit cost of making the bread. Brady House Outsourcing Decision i Requirements Direct material Direct labor Variable overhead Variable cost per unit 1. What is the full product unit cost of making the bread in-house? 2. Should Brady House bake the bread in-house or buy from the local bakery? Why? 3. In addition to the financial analysis, what else should Brady House consider when making this decision? Plus: Fixed overhead per unit Cost per unit Print Done 3rik, located in Port St. Lucie, Florida, produces two lines of electric toothbrushes: deluxe and standard. Because Brik can sell all the toothbrushes it can produce, the owners are expanding the plant. They are deciding which product line to Imphasize. To make this decision, they assemble the following data: (Click the icon to view the data.) After expansion, the factory will have a production capacity of 4,300 machine hours per month. The plant can manufacture either 50 standard electric toothbrushes or 28 deluxe electric toothbrushes per machine hour. Read the requirements. Requirement 1. Identify the constraining factor for Brik. 3rik's constraint is machine hours Requirement 2. Prepare a product mix analysis to show which product line to emphasize. Deluxe Toothbrushes Standard Toothbrushes Requirements Contribution margin per toothbrush Fixed cost per toothbrush 1. Identify the constraining factor for Brik. 2. Prepare an analysis to show which product line to emphasize. Contribution margin per DM cost Decision: Emphasize the Brik standard electric toothbrush Print Done Brik, located in Port St. Lucie, Florida, produces two lines of electric toothbrushes: deluxe and standard. Because Brik can sell all the toothbrushes it can produce, the owners are expanding the plant. They are deciding which product line to emphasize. To make this decision, they assemble the following data: (Click the icon to view the data.) After expansion, the factory will have a production capacity of 4,300 machine hours per month. The plant can manufacture either 50 standard electric toothbrushes or 28 deluxe electric toothbrushes per machine hour. Read the requirements. Requirement 1. Identify the constraining factor for Brik. Brik's constraint is Requirement 2. Prepare a product mix analysis to show which product line to emphasize. Deluxe Standard Toothbrushes Toothbrushes Contribution margin per Decision
